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Small business will be hit hard by Canada Post’s plans to hike the price of a stamp by nearly 35 per cent next spring, business groups say.

Many independent operators still rely on paper invoices, cheques and bills sent by letter mail to run their businesses, the groups warned this week.

The Canadian Federation of Independent Grocers has called on Ottawa to postpone the increase — from the current 63 cents per stamp to 85 cents — and phase it in over two stages.

“Measures such as the one announced by Canada Post can often have a disproportionately deeper impact on small business,” the grocers’ president and chief executive officer Tom Barlow wrote in a letter to Transport Minister Lisa Raitt.

Another business group says the federal government needs to push the post office to more aggressively cut its labour costs and allow the private sector to compete for mail delivery instead of approving a “massive” price increase.

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“These are not small hikes,” said Dan Kelly, president of the Canadian Federation of Independent Business. “For most small business, postal service is still relatively important.”

The rate increase is part of a five-point plan that includes an end to door-to-door delivery in urban neighbourhoods and up to 8,000 job cuts over the next five years, Canada Post announced on Wednesday.

Canada Post said the changes, which will cut its expenses by up to $900 million a year, are needed to keep the postal service from becoming a burden on taxpayers.

Post offices around the world are struggling to survive in the Internet age as people choose email and texting over letter mail. Some postal services have privatized, while others have ended government monopolies to boost competition.

The price of a stamp would jump from the current 63 cents to $1 if bought one at a time and to 85 cents each if bought in booklets or coils, effective March 31, 2014, Canada Post said. Only 2 per cent of purchases are for single stamps.

For businesses that use postage meters, the cost would rise to 75 cents per stamp, Canada Post said.

For small businesses that buy 250 stamps a year, the increase amounts to $55 a year, Canada Post said. For small and medium size businesses that buy 1,800 stamps on average, the increase amounts to $200 a year.

The cost of delivering flyers and parcels is unaffected. The changes also preserve five-day delivery, an important feature to small business, Canada Post spokesperson Jon Hamilton noted.

Canada Post says it recognizes that small businesses and non-profit organizations will face higher costs. But it maintains the price of a stamp is still reasonable.

The proposals still require the approval of the federal cabinet before coming into effect.

Business groups say the postal service is underestimating the impact on their members.

Some 40 per cent of small business owners send at least 50 pieces of letter mail per month and 90 per cent still use letter mail every month, a survey by the federation of independent business found.

Two-thirds said sending and receiving mail was very important to their business and another 30 per cent said it was somewhat important, the survey showed.

“Three quarters of small firms said they oppose significant price hikes like the ones announced by Canada Post today,” Kelly said.

A quick survey of grocery retailers found even small independents are spending up to $3,000 a year on postal services, the federation of independent grocers said.

A C.D. Howe Institute report in August suggested privatizing some postal services to cut costs.

A Conference Board of Canada report in April, commissioned by Canada Post, warned taxpayers would be on the hook for $1 billion a year in postal subsidies by the end of the decade if the service failed to modernize.

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